US Markets

Recession in US looks unlikely: Analysts

What to watch after bad start to Q1
What to watch after bad start to Q1

Though U.S. equities broke their three-day winning streak Thursday, analysts are still optimistic that we are not necessarily headed for a recession.

The recent rally is a signal to investors that it is possible to bounce back from U.S. market declines experienced earlier this year, noted John Stoltzfus, chief market strategist at Oppenheimer.

"It certainly works against the grain of the thought that we're going into a recession," he told CNBC's "Squawk on the Street" on Thursday.

Pointing to growth in the euro zone economy in the last three months of 2015, Stoltzfus also noted that Europe is beginning to start a recovery process.

Another major sign for investors to watch is how the U.S. consumer is doing and whether international developments ultimately undermine the domestic story, said Michelle Girard, chief U.S. economist at RBS, in the same "Squawk on the Street" segment.

"The good news is, so far, the U.S. economy is showing a lot of resilience," said Girard. "I think when we see numbers like we saw with retail sales last week, that sets the stage for the better performance in the equity market."

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U.S. consumer spending appeared to regain momentum in January as households ramped up purchases of a variety of goods, in a hopeful sign that economic growth was picking up after slowing to a crawl at the end of 2015.

When business are worried about the sustainability of their consumers, they lay off their workers and pull back, Girard noted. But CEOs in the retail sector have actually done the opposite, she said.

"Companies in the retail sector, in the restaurant sector, they kept more of their workers that they hired over the holidays than they usually do," said Girard. "I think they're still seeing good underlying support for the consumer. I think ultimately that's what comes together to give us more resilience with the U.S. economy." 

— Reuters contributed to this article.